Standard Life’s operating profit jumped 19 per cent to £604m in 2014, beating analysts predictions.
However, while the group reported strong performance in last year’s final results, it warned that annuity sales would be hit this year by government pension reforms.
Analysts polled by the company had forecast operating profit before tax from continuing operations at £559m.
Standard Life said it would pay a final dividend of 11.43p per share and total dividend of 17.03p, up 7.8 per cent across the year.
Assets under administration from continuing operations rose 38 per cent to £296.6bn pounds, against £294bn forecast.
The growth was driven by net inflows, positive market movements and the acquisition of Ignis Asset Management, the firm said.
UK retail and corporate fee business assets under administration were up seven per cent to £102.8bn. New net inflows of AUA totalled £5.1bn, up 8 per cent from the start of the year.
The pensions giant said it added 360,000 new customers in 1,300 corporate schemes as a result of the Government’s auto-enrolment policy.
However, Standard Life said it had already seen a “significant reduction” in demand for annuities following Chancellor George Osborne’s pension announcements in the 2014 Budget.
The group said it expects a further “step down” in the profitability of its spread/risk business in coming years.
It said: “In 2015, we expect the contribution from annuity new business to reduce by between £10m-£15m and the contribution from asset liability management to reduce by between £30m-£40m.”
The margin from annuity new business sales was 66 per cent lower in 2014.
The sale of its Canadian business, announced in September 2014, will increase its focus on fee business and enables the proposed return of £1.75bn to shareholders, Standard Life said.
The firm’s chief executive David Nish said that while investment markets are “unsettled”, the business is well-placed for the future.
He said: “We have an excellent track record of succeeding in evolving markets and have the products, experience and proven investment performance to help our customers and clients in all of our markets to save and invest.”